An inventory model under two-level trade credit when demand is stimulated by stock level

Abstract

An inventory model for deteriorating item under two-level trade credit is presented. The demand rate is a linear function of the inventory level if it is more than a certain amount; otherwise the demand rate is a constant. The optimal cycle and order quantity are determined. Numerical examples are given to illustrate the theoretical results. Sensitive analysis of major parameters has been carried out and the implications are discussed.